Microsoft Q4 EPS $4.14 Beats Estimates as Cloud Revenue Jumps 28%
Microsoft’s Q4 adjusted EPS of $4.14 grew 24% year-over-year on $81.3 billion revenue, up 17%, beating consensus, while CapEx reached $37.5 billion, mostly for AI and Azure hardware. Intelligent Cloud revenue rose 28% to $32.9 billion with margin pressure, forward P/E at 23.4X versus a 30.6X five-year median and EPS outlook up 15%.
1. Q4 Earnings and Revenue Growth
Microsoft reported adjusted EPS of $4.14 for Q4, up 24% year-over-year, on $81.3 billion in revenue, a 17% increase from the prior year, handily exceeding analyst expectations. This marks another quarter in which the company has continued its streak of earnings beats, driven by sustained service demand.
2. Cloud Segment Performance and Margins
The Intelligent Cloud segment generated $32.9 billion in revenue, a 28% year-over-year increase, reflecting robust Azure adoption. However, gross margins in the segment contracted due to heavy investments in AI infrastructure and capacity expansion.
3. Capital Expenditures and AI Investments
Total capital expenditures reached $37.5 billion in the quarter, including $29.9 billion for property and equipment such as GPUs and CPUs to support growing Azure and AI workloads. This uptick underscores Microsoft’s aggressive build-out of cloud and AI capabilities.
4. Valuation and Outlook
Microsoft’s forward 12-month P/E multiple stands at 23.4X, down from a five-year median of 30.6X and representing a 3% premium to the S&P 500. Consensus EPS estimates for the current fiscal year have risen 15% over the past year, highlighting bullish analyst revisions despite recent stock underperformance.